Starting a Corporate Digital Transformation Journey?

In Rewired, authors Eric LaMarre, Kate Smaje, and Rodney Zemmel tell the following story about a McKinsey & Company client:

A large global credit card issuer had 200 different digital applications for managing customer data.  Each application was selected on a project-by-project basis.  The cost was an average of $300,000 per year per application. 

Regulators faulted the company for lacking a consistent way of assessing risk. 

To address the issue, the company created a company-wide team to map use and assign each value.  The team built a set of company-wide shared analytics codes. This enabled them to roll 200 different digital applications into a single system.  

The result was $300 million per year in savings, more accurate customer data, and better compliance.  

 Most readers of this blog work for smaller companies, but the implication of the case still applies: Corporate digital transformation can yield significant benefits. Here's how to position your company for change in a constantly changing digital world.

Technology Change Is Also Culture Change.

Rewired is designed as a guide for “leaders (who will be) digitally transforming their companies for the rest of their careers.”  Digital and artificial intelligence (AI) transformations are hard to undertake and violate traditional “stay in your lane” corporate cultures. McKinsey surveyed 1,300 senior business executives.  70% of the top performers use advanced analytics to develop insights and 50% use AI to improve decision-making. And yet only 25% of AI transformations are rated as “successful.” How can you avoid being one of the unsuccessful 75%?

Vision Alignment and Commitment. 

Digital transformation involves both technology and corporate culture change. The effort must be actively led by the CEO with help from multifunctional work teams. If the CEO is not willing to be actively involved, do not undertake the journey.

Digital transformation is a multiyear journey. In other words, the book’s recommendations may not be of value for companies with exit strategies of four years or less. 

If the CEO fails to generate strong commitment from the Board, the CEO cannot expect to be supported by the Board when the going gets rough. And it inevitably will get rough, because changing technology involves changing corporate culture.

The authors discusst the importance of creating a culture in which a silo mentality cannot thrive.  They do not discuss the reward systems required to achieve such a culture.  That is a major omission. If you want to change a “stay in your lane” culture, the reward systems must signal that desired culture change. The hiring system needs to change towards recruiting people who welcome team-based innovations that cut across functional lines. Recruitment and retention will become even more critical and more expensive. Is the company willing to invest in these areas?

Summary and Conclusions 

Digital and AI transformation is a journey of constant evolution. It is also the modern way that businesses will work.  

If you have the Board's support and the appropriate time horizon, this book can be of value.

If you are a functional head given the mandate to lead the digital transformation charge by a CEO who lacks time/interest to be an active leader in this process, you may want to respectfully decline or look for a graceful exit from the company.